Living trust basics
Many people are under the misconception that estate planning is only for the wealthy. Not true. Regardless of your age or your wealth, it’s a particularly good idea to plan in advance on how to distribute your assets if you become incapacitated or after your death.
Basic estate planning involves drafting a will which can include your assets and property as well as important decisions such as who will care for your minor children if something happens to you and your spouse.
So, why consider a living trust as part of your estate plan? First of all, you should familiarize yourself with basics about living trusts. A living trust is a legal document that places all of your assets in a trust for your benefit during your lifetime. In addition, it also makes clear what happens to those assets after your death. If it is a revocable living trust, you can cancel or change it at any time should your personal situation change.
Before making the decision about whether or not a living trust is best for you know, familiarize yourself with the rules involved in setting up a trust, such as what you can put in a living trust, but also the advantages vs. the disadvantages.
Establishing a trust is easier than you may think
When establishing a living trust, there are some basic requirements you will need to meet. Because you are setting up a trust, you are the “trustor” or “grantor,” and you’ll name yourself as trustee. As the trustee, you will remain in control of your assets.
Next step is to name a successor trustee who will serve as your personal representative if you should become incapacitated. Upon your death they will transfer your assets directly to the beneficiaries named in the trust according to your wishes.
Another requirement of setting up a living trust is that you have to fund it with your assets. This means that you will retitle your property and accounts in the name of the trust. You will also want to create a “pour-over” will which states that any assets that have not been placed in the trust should be included when you die.
What are the benefits of settling up a living trust? The advantages include:
- Are difficult to contest
- Privacy protection
- Avoids the cost and hassle of the probate process
- The need to retitle and re-deed
- The cost of using an attorney
- The time involved in filling out the necessary paperwork
There are online tools that allow you to create your own living trust and save on the cost of legal help, but you should consider enlisting the services of an estate planning attorney who can explain living trust basics and set up some guidelines for your particular situation.
Where it gets a little complicated
While living trust basics seem fairly straight forward, establishing one requires that you make a thorough analysis of your situation as well as careful decisions, such as what you should and what you should not put in your living trust.
Working with an experienced estate planning attorney like David W. Foley, California Living Trusts, will ensure you have a high quality and comprehensive plan that is best for you. As a family owned and operated law firm, who are well-versed in California law, we understand what families face.Schedule your Consultation